U.S. pays Halliburton high price to ship fuel

Cost is more than twice what others pay for import

December 10, 2003|By NEW YORK TIMES NEWS SERVICE

The U.S. government is paying the Halliburton Co. an average of $2.64 a gallon to import gasoline and other fuel to Iraq from Kuwait, more than twice what others are paying to truck in Kuwaiti fuel, government documents show.

Halliburton, which has the exclusive contract to import fuel into Iraq, subcontracts the work to a Kuwaiti firm, government officials said. But Halliburton receives 26 cents a gallon to cover overhead costs and its fee, according to documents from the Army Corps of Engineers.

The cost of importing fuel to Iraq first came to public attention in October when two senior Democrats in Congress, Rep. Henry A. Waxman of California and Rep. John D. Dingell of Michigan, criticized Halliburton, the huge Houston-based oil-field services company, for "inflating gasoline prices at a great cost to U.S. taxpayers."

At the time, it was estimated that Halliburton was charging the U.S. government and Iraq's oil-for-food program an average of about $1.60 a gallon for fuel that was available wholesale in the Persian Gulf region for 71 cents.

But a breakdown of fuel costs, contained in Army Corps documents recently provided to Democratic congressional investigators, shows that Halliburton is charging $2.64 for a gallon of fuel it imports from Kuwait and $1.24 per gallon for fuel from Turkey. The fuel is sold in Iraq for 5 cents to 15 cents a gallon.

The Iraqi state oil company and the Pentagon's Defense Energy Support Center import fuel from Kuwait for less than half of the cost per gallon charged by Halliburton, according to government records.

A spokeswoman for Halliburton, Wendy Hall, defended the company's pricing. "It is expensive to purchase, ship and deliver fuel into a wartime situation, especially when you are limited by short duration contracting," she said.

A spokesman for the Army Corps of Engineers, Bob Faletti, also defended the price of imported fuel.

"Everyone is talking about high costs, but no one is talking about the dangers, or the number of fuel trucks that have been blown up," Faletti said. "That's the reason it is so expensive." He said recent government audits had found no improprieties in the Halliburton contract.